FOIEtGN CLAIMS SETTLEMENT COMMIS$10N OF THE UNITED STATES

WASHINGTON Dc 20579

IN THE MATlEll QJ THE CrAJll Of

BART~ETr- COLLINS COMP ANY

9

Under the International Claims Settlment Act of 1949 aa amp111ended

Claim NoCU -2192

Decision No CU middot

~

Counsel for claimant Loeffler amp Allen

PROPOSEP DECISION

This claim against the Government of Cuba under Title V of the

International Claims Settlement Act -of 1949 as amended was presented

by BARTLETr-COLIINS COMPANY in the amount of $66993358 based upon the

asserted loss of stockholder interests in two Cuban entities and upon

the asserted loss of certain accounts receivable notes receivable and

advances

Under Title V of the International Claims Settlement Act of 1949

[78 Stat 1110 (1964) 22 usc sectsect1643-1643k (1964) as amended

79 Stat 988 (1965)] the Commission is given jurisdiction over claims

of nationals of the United States against the Government of Cuba Secshy

tion 503(a) of the Act provides that theConnnission shall receive and

determine in accordance with applicable substantive law including

international law the amount and validity of claims by nationals of the

United States against the Government of Cuba arising since January 1

1959 for

losses resulting from the nationalization expropriashytion intervention or other taking of or special measures directed against property including any middot rights or interests therein owned wholly or partially directly or indirectly at the time by nationals of the United States

Section 502(3) of the Act provides

The term property means any property right or interest including any leasehold interest and debts owed by the G9vernment of Cuba or by entershyprises which have been nationalized expropriated middot

2

intervened or taken by the Government of Cuba and debts which are a charge on property which has been nationalized expropriated intervened or taken by the Government of Cuba

Section 502 (l) (B) ofmiddot the Act defines the te)m national of the

United State-in as a corporation or other le~~1 ~ptity which is organized

under the laws of the United States or of any State the District of

e Colmicrombia or the Commonwealth of Puerto Rico if natmicroral persons who are

citizens of the United States own directly or inliirectly 50 per centum

or more of the qmicrotstanding capital stock or other beneficial interest of

such corpor~tion or entity~

The record discloses that the claimant corporation was organized in

the $tate of Delaware on Octobe-r 13 1937 and that from at least July 11 J

1961 until presentation of this claim on Ap-ril 27 1967 more than 50 of

the claimants out$tanding capital stock w~s owned by United States

nationals The Commission holds that claimant is a national of the United

States within the meaning of Section 502(l)(B) of the Act

A principal officer of the claimant corporation states that all of

claimants_ outstanding capital stock is held by nationals of the United

States

Claimant ow~ed 1495 shares of Industrias Bartlett-Collins De Cuba

S A a Cuban corporation having principal offices in Wajay Cuba and

212 shares of Compania Inversionista Cabin s A a Cuban corporation

having principal offices in Rancho Boyeros Cuba These companies were

engaged in the china and glassware business Claimant contends that the

properties of both corporations were confiscated by the Republic of Cuba

without compensation

Compania Inversionista Cabin s A was listed as nationalized by

the Government of Cuba on January 8 1962 nd Industrias Bartlett-Collins

De Cuba S A was listed as nationalized on March 27 1962 in the Cuban

Official Gazette (both pursuant to Cuban Law 890 Official Gazette Octoshy

ber 13 1960) The Commission concludes that claimant sustained a loss

as a resmicrolt of nationalization of the aforesaid entities and in the

cu 2192

3

absence of evidence to the contrary concludes that said loss was sustained

on January 8 1962~ with respect to its stockholder interest in Compania

Inversionista Cabin S A and on Match 27 1962 with respect to its

stockholder interest in Industrias Bartlett-Collins Oe Cuba s A

The Act provides in Section 503(a) that in making determinations

with respect to thevalidity and amount of claims and value of properties

rights or interests taken the Commission shall take into account the

middot basis of valuation most appropriate to the property and equitable to the

claimant including middotbut not limited to fair market value book value

going concern value or cost of replacement

The question in all cases will be to determine the basis of valushy

ation which under tlte palticular circumstances is most appropriate to

the property and equitable to the claimant The Connnission has concluded

that this phraeeology does not differ from the international legal standshy

ard that would normally prevail in the evaluation of nationalized property

and that it is designed to strengthen that standard by giving specific

basis of valuation that the Connnission shall consider ie fair market

value book value going concern value or cost or replacement

Claimant has stated that the dollar amount of its stockholder inshy

terest should be computed at $184300 for its interest in Industrias

Bartlett-Colliqs De Cuba s A and at $16294557 for its interest i-

Compania Inversio~ista De Cabin S A Claimant asserts that these

amounts constitute its investment in these companies but has not set

fotth the basis of its computation

In support of its claim claimant has submitted balance sheets and

income statements for the two Cuban corporations for the year 1960 In

the absence of other evidence the Commission concludes that the book

value is the most appropriate basis of valuation

The balance sheets e~amined and prepared by an acceptable accounting

firm are set forth below

CU-2192

3

absence of evidence to the contrary concludes that said loss was sustained

on January 8 1962~ with respect to its stockholder interest in Compania

Inversionista Cabin S A and on Match 27 1962 with respect to its

stockholder interest in Industrias Bartlett-Collins Oe Cuba s A

The Act provides in Section 503(a) that in making determinations

with respect to thevalidity and amount of claims and value of properties

rights or interests taken the Commission shall take into account the

middot basis of valuation most appropriate to the property and equitable to the

claimant including middotbut not limited to fair market value book value

going concern value or cost of replacement

The question in all cases will be to determine the basis of valushy

ation which under tlte palticular circumstances is most appropriate to

the property and equitable to the claimant The Connnission has concluded

that this phraeeology does not differ from the international legal standshy

ard that would normally prevail in the evaluation of nationalized property

and that it is designed to strengthen that standard by giving specific

basis of valuation that the Connnission shall consider ie fair market

value book value going concern value or cost or replacement

Claimant has stated that the dollar amount of its stockholder inshy

terest should be computed at $184300 for its interest in Industrias

Bartlett-Colliqs De Cuba s A and at $16294557 for its interest i-

Compania Inversio~ista De Cabin S A Claimant asserts that these

amounts constitute its investment in these companies but has not set

fotth the basis of its computation

In support of its claim claimant has submitted balance sheets and

income statements for the two Cuban corporations for the year 1960 In

the absence of other evidence the Commission concludes that the book

value is the most appropriate basis of valuation

The balance sheets e~amined and prepared by an acceptable accounting

firm are set forth below

CU-2192

- 4 -

Industrias Bartlett-Collins ~e Cuba s A

Balance Sheet

October 31 1960

Assets

Current assets Cash in bank and on hand Receivables - Trade Inventories

Finished $ 2390027 Blanks other materials and supp lies 3106800 In transit 259636

Prepaid expenses Insurance 224715 Advances on salaries 2 15105 Commissions 1500000 Others 95426

Total current assets

Oue from affiliated company Compania Inversionista Cabin S A

Investments at cost Ferrocarriles Occidentales de Cuba S A Compania Cubana de Electricidad

20000 50000

Plant and equipment at cost Less allowance for depreciation

157 813 45 1772274

Goodwill

Trademarks

Organization expenses less amortization $133774

Liabilities

Current liabilities Accounts payable Accrued taxes Accrued payroll and vacations Accrued connnissions Other accrued expenses Bartlett-Collins Company current account Bartlett-Collins Company accrued interest

Total current liabilities

Long term debt Bartlett-Collin~ Company - 3-12 loan

Stockholders equity middot Conunon stock par value $10000 per share

Authorized 2500 shares issued and outstanding 1500 share$ $150000~00

Retained earnings 1233943

$ 15 428 96 366078

5758463

2035246 9702683

13 151 93

70000

14009071

11000000

34297

367749 $36498993

243251 694835 524510 142596 132080

1761924 1265854

$ 4765050

15500000

16Z33943

$36498993

This had been increased to 1550 shtres before Mar~h 27 1~62

- 5 shy

COMPANIA INVERSONISTA CABIN s A

Balance Sheet

December 31 1960

Assets

Current assets Accounts receivable - trade $ 58000 Accounts receivable - others 6000 InventQries at cost

~ Finished stock $ 448000 W Raw materials 14000 462000

Deposits 34000 Prepaid expenses

Workmen compensation insurance 6915 Municipal taxes 5243 12158

Total current assets 5 721 58

Fixed assets Land 1888814 Buildings $ 6723981 Electrical installations 1393724 Roadand bridge 171950 Fences 20680 Well 96384

8406719 Less reserve for depreciation 1842546 6564173 Machinery and equipment 9948864 Valves tubing and faucets 16 49158

lfS98022 ~ss reserve for depreciation 3998376 7599646 Furniture and fixtures 171250

Less reserve for depreciation l71250 Tools 199013 16251646

$16823804

Liabilities

Current liabilities Bank overdraft $ 36528 Bartlett-Collins Company 403244 Accrued taxes 165350

Total current liabilities 605122 rndustrias Bartlett-Collins de Cuba S A 1700000 tockholders equity

Capital stock Authorized 250 connnon shares

$100000 each - $25000000 Issued and outstanding 214 shares $21400000

Capital surplus 2326557 Surplus or (deficit)

Balance at beginning of year $(8281018) Loss for the year (926857) (9207875) 14518682

$168 238 04

This had been increased to 250 shares before January 8 1962

bull CU-2192

6

The balance sheets enumerate the assets tangible middot and intangible

and the liabilities of the enteiprises The liabilities (fonsist of

creditors claims which are contractual in nature and those of the

owner which are residual in nature The excess of assets over conshy

tractud liabilities in the usual situation represents the owners

equity or net worth The same result therefore may be reached by

adding the capital investment appropriate surplus reserves (not

including reserves for depreciation taxes and the like) and any

undivided profit as appropriate and substracting any outstanding

deficit

However with respect to Industrias Bartlett-Collins De Cuba no

evidence in support of the designated asset of good will in the

amount of $11000000 was submitted Further the income statements

in evidence for Industrias Bartlett-Collins De Cuba s A disclose

~that said company was operating at a loss Accordingly except as

a bookkeeping entry there is no basis in the record for a finding

that the subject company had any good will value Moreover it

appears that the item of organizational expenses is merely a

bookkeeping expense item and should not be considered as an

asset for purposes of certification of loss

Thus the calculation of net worth of the CuBan entities is as

follows

CU-2192

7

Industrias Bartlett-Collins De Cuba S A I

e Total assets (adjusted by subtracting good will valued at $11000000 and organizational expenses valued at $3677~49) $25131244

Less current liabilities and long term debt 20265050

Net Worth $ 48 661 94

Compania Inyersionista Cabin S A

Total assets $16823804

Less current liabilities and debt to affiliateamp company 23 051 22

Net Worth $14518682

The Commission finds based upon the evidence of record that

e Industrias Bartlet t-Collins De Cuba S A had 1550 shares of stock

outstanding on the date of its nationalization and that Compania

Inversionista Cabin S A had 250 shares of stock outstanding on the

date of its nationalization and concludes that as a result of the

nationalization of Industrias Bartlett-Collins De Cuba S A by the

Government of Cuba on March 27 1962 claimant suffered a loss on that

date of $4693523 for its interest (1495 shares) and that as a

result of nationalization of Compania Inversionista Cabin s A by the

Government of Cuba on January 8 1962 claimant suffered a loss on that

date of $12311842 for its interest (212 shares) all within the

meaning of Title V of the Act bull

bull CU-2192

A portion of this claim in the amount of $35214501 is based upon

the asserted loss of certain accounts receivable notes receivable and

advances In support of this portion of its claim claimant has submitted

photocopies of various invoices~ re~lecting the following sales of goods

~

to Cuban consignees

I Industrias Bartlett-Co]lills De Cuba s A

Invoice Date

October 14

October 20

October 20

October 30

November 2

November 2

November 2

1959

1959

1959

1959

1959

1959

1959

November 3 1959

November 4 1959

November 4 1959

November 6 1959

November 23 1959

November 24 1959

December is 1959

Invoice Number

9242

9869

9983

11371

11451

11452

11453

11468

11720

11721

11900

13245

13349

14176

Total

II Comercial B Robayna s A

Invoice Date

March 12 1959

March 13 1959

March 18 1959

March 20 1959

March 20 1959

March 25 1959

April 15 1959

Invoice Number

22694

22812

23207

23436

23437

23778

25999

Amount

$ 223488

303669

313241

384066

108 25

8122

269392

269390

421416

287133

269390

538923

446817

346342

$4092214

Amount

$ 198436

~93239

67790

198436

228495

577 36

66481

bull CU-2192

9

April 16 1959 2(i002 240524

May 8 1959 27939 397564

June 23 1959 31893 198436

July 1 1959 101 198436

July 2 1959 228 132771

July 3 1959 377 198436e July 6 1959 456 324755

August 26 1959 4877 459631

August 28 1959 5298 155029

August 31 1959 5302 501487

September 8 1959 5891 198436

Octolgter 12 1959 9016 432938

October 12 1959 9017 407674

October 16 1959 9801 476267

October 22 1959 10268 459394

October 26 1959 10501 455039

Total $6447430

Claimant states that the aforementioned accounts receivable from

e Industrias Bartlett-Collins De Cuba S A should be reduced in the

~mount of $40157 representing credit issued for breakage and in the

furtber amount of $174410 representing import duties and that the

aforementioned accounts receivable from Comercial B Robayana S A

should be reduced in the amount of $57716 representing credit issued

for bre~kage Claimant states that it has not received the aforeme~tioned

funds

The Ggvernment of Cuba on September 29 1959 published its Law 568

concerning foreign exchange Thereafter the Cuban Government effectively

precluded not only transfers of funds to creditors abroad but also payshy

ment to creditors within Cuba by numerous unreasonable and costly

demands upon the consignees who were thus deterred from complying with

the demands of the Cuban Government The Conunission holds that Cuban

~ CU-2192

10

Iaw 568 and the Cuban Governments implementatioI) thereof with respect

to the rights of the claimant herein was not in reality a legitimate

exercise of sovereign authority to reguhte foreign exchange but conshy

stituted an intervention by the GoverrunEint of Cuba into the contractual

rights of the claimant which resulted in the taking of American-owned

property within the meaning of Section 503(a) of the Act (See Claim

~f The Schwarzenbach Huber Company Claim No CU~0019 25 FCSC Semiann

Rep 58 [JulyDec 1966] and Claim of Etna Pozzolana Corporation Claim

No cu0049)

Accordingly with respect to the debts due the claimant the Commis

sion finds that claimants property was lost as a result of intervention

by the Goverllllent of Cuba and that in the absence of evidence to the

contrary the loss occuned on the respective invoice dates with respect

to those dates subsequent to September 29 1959 However with respect

to those invoice dates prior to September 29 1959 the Commission finds that

the loss occurred on September 29 1959 the effective date of Law 568

Finally claimant has submitted a photocopy of a promissory

note drawn by Industrias BartlettCollins De Cuba s A in the amotint

of $15500000 arid payable to the claimant on July 1 1963 This amount

is reflected on the balance sheet of Industrias Bartlett~Collins De Cuba

S A of October 31 1960 as a long term debt Claimant states that

it has never received payment on said note

As to this portion of the claim the Commission holds that claimant

suffered a loss in the amount of $15500000 within the meacing of Title V

of the Act as a result of the nationalization of Industrias Bartlett~Collins

De Cuba S A on March 27 1962 (See Claim of Kramer Marx Gree~lee a~d

Backus Claini tllo~ CV-0105 25 middot FCSC Semiann Rep 62 [July-Dec 196S])

The Commission has decided that in certification of losses on claims

determined pursuant to Title V of the International Claims Settlement

Act of 1949 as amended intere11t should be included at the rate of 6

per annum from the date of loss to the date of settlement (See Claim of

Iisle Corporation Claim No cu-~644) CU-2192

11

Accordingly the Co~is~S _ion conc_lultles_ that the amount Off~~~ toss

sustained by claimant shall be increased by interest thereon at the

rate of 6 per annum from the dates on which the loss occurred to

the date on whi~h provisions are made for the settlement thereof as

follows

Qu As To

September 29 1959 $ _4158402

October 12 1959 840612

October 14 1959 8921

October 16 1959 4 76267

October 20 1959 616910

October 22 1959 4593 94

October 26 1959 455039

October 30 1959 384066

November 2 1959 288339

November 3 1959 269390

November 4 1959 708549

November 6 1959 269390 e November 23 1959 538923

November 24 l959 4~46817

Pecember 15 1959 346342

January 8 1962 12311842

March 27 1962 20193523

Total $427 7~726

CU-2192

bull

- middot

12

CERTlFICATIONOF LOSS

The ~ommissiori ~rtifies that BARTLETT-COLLINS COMPANY suffered middot

a loss as a result of actions of the Govern4lent of Cuba within themiddot

scope of Title V of the Intetnational Claims Settlement Act of 1_949

as amended in the amount of Four Hundred Twenty-Seven Thousand

Seven Hundred TwentybullSeven Dollars ana Twenty-SiXCents ($42772726)

with interest thereon at 6 per annum from the dates of loss to the

date of settlement 1middot

Dated at Washington D c and entered as the Proposed Decision of the commission

he statmicrote dtgtes n-ot provide for the paYIlsectnt middotof claims against the Qov~OUnent middotof CUbth middot Provision 1S middot only made pound-Or the determinatiq11

by the Connnission of the validity and axnotmts ampf smicroch cl~ims middot middot - Section 501 of the smiddot~atute middotspe~ifically precludes any authorization for appropria_tion$ for payment of these claipis middot Ille Conmission middotis requiiedto certify Lts middot fihding$ to the Secretary of State for pos$ible use middot in middotfutur-e middotne~otiations with the Government of Cuba

NPTlCE Pursuant to ~e Regulatioris of the Commission if ~o objections middot~re filed within 15 days after se1Vice or receipt of notice Qf this Proshyposed Pecision the decision wpl be entered as the Final Decision of the middotQonnn$ssion ilpon thcent expir~tion of 30 dtys after such 1 s~vice or reshy

ceipi Jgtfhotice unless middot the ltommission otherwise orders (FCSC Reg

bull 45 CFa 531S(e) and (g) as amended 32 Fed Reg 412-13 (1~67))

CU-2192